London’s FTSE 100 ended Tuesday morning how it started it, barely budging in cautious trade ahead of Wednesday’s US inflation report.
Miners were on the up, as were oil majors, though that still could not lift the FTSE 100 into the green. Heavyweights such as drugmaker GSK, down 0.5% and defence firm BAE Systems, sliding 4.2%, were among those holding back London’s blue-chip benchmark.
The FTSE 100 index was down just 0.46 of a point at 7,943.01. Still, it outperformed European peers. The CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was 0.7% lower.
The FTSE 250 was up only 2.80 points at 19,857.38, and the AIM All-Share rose 2.93 points, 0.4%, at 751.76.
The Cboe UK 100 was up 0.1% at 794.61, the Cboe UK 250 was up 0.1% at 17,303.03, and the Cboe Small Companies was up slightly at 14,698.89.
‘European markets showed signs of nervousness ahead of the European Central Bank’s interest rate decision later this week,’ said Russ Mould, investment director at AJ Bell.
‘Forecasts imply the ECB will hold rates at 4.5% yet last week’s stronger than expected US jobs data and the ongoing strength in the oil price have raised expectations that the Federal Reserve will push back rate cuts until later in the year, and this has subsequently spooked investors into thinking other central banks including the ECB will also sit on their hands for now.’
The ECB will announce its interest rate decision on Thursday.
Before that, there is a consumer price inflation reading in the US.
The data is expected to show that the rate of US annual consumer price inflation picked up to 3.4% last month, from 3.2% in February, according to FXStreet cited consensus.
If the rate of consumer price inflation picks up by more than expected, it could mean the Federal Reserve will re-think its interest rate outlook. In its last set of economic projections, the dot-plot showed three rate cuts were still the best bet for 2023.
SPI Asset Management analyst Stephen Innes said the inflation reading ‘is arguably the most critical economic print of the year’.
The pound was quoted at $1.2686 at midday on Tuesday in London, higher compared to $1.2652 at the equities close on Monday. The euro stood at $1.0869, rising against $1.0854. Against the yen, the dollar was trading at JP¥151.78, down compared to JP¥151.82.
In the FTSE 100, miners were up at midday. Fresnillo, Anglo American and Rio Tinto rose 4.9%, 2.4%, and 2.1%, respectively.
‘Mining stocks have benefitted from rising iron ore prices amid speculation that demand will improve from Chinese steelmakers. The Chinese government is eager to stimulate the economy and there is a hope that its initiatives will feed through into greater steel activity, with iron ore a key raw material,’ AJ Bell’s Mould explained.
Oil firms BP and Shell rose 1.7% and 0.8%, respectively.
Shell fired a warning shot to that it could be prepared to move its listing to the US in a fresh blow to London’s financial centre.
Shell’s Chief Executive Wael Sawan said the company is looking at ‘all options’ for its listing amid concerns it is under-appreciated by investors, according to a Bloomberg report.
‘I have a location that clearly seems to be undervalued,’ he remarked, referring to London.
On Tuesday, BP said upstream production in the quarter ending March is expected to be higher compared to the prior quarter, with output higher in oil production & operations and slightly higher in gas & low carbon energy.
But in the gas & low carbon energy segment, lower gas prices compared to the prior quarter are expected to have an adverse impact in the range of $200 million to $400 million, BP said.
Brent oil was quoted at $90.51 a barrel at midday in London on Tuesday, up from $89.93 late Monday.
In the FTSE 250, JTC jumped 5.4%.
The Jersey-based professional services business reported that revenue in 2023 climbed 29% to £257.4 million from £200.0 million a year earlier.
However, pretax profit fell 33% to £24.3 million from £35.9 million.
On the back of the results, JTC proposed a final dividend of 7.67 pence per share, a rise of 11% from 6.88p a year prior. This brought the total payout for 2023 to 11.17p, up 12% from 9.98p the year prior.
Among London’s small-caps, ProCook jumped 7.5%.
The company on Tuesday predicted annual profit to be ‘marginally’ ahead of market expectations, shaking off ‘subdued’ economic conditions.
The Gloucester-based kitchenware company reported revenue of £13.2 million for the fourth quarter for the year ended March 31, a rise of 4.8% on-year. It would mean full year revenue of £62.6 million, an increase of 0.4% from the previous year.
On AIM, Surface Transforms plummeted 30%, after the company said it is continuing to remedy production problems at its Liverpool site and announced a delay to the publication of its 2023 financial results.
Stocks in New York were called mixed to open largely higher. The Dow Jones Industrial Average was called down slightly, but the S&P 500 index and the Nasdaq Composite are seen opening up 0.1%.
Gold hit a new record high on Monday, above $2,350 per ounce, before easing back.
ActivTrades analyst Ricardo Evangelista commented: ‘Gold prices hit a fresh all-time high during early Tuesday trading, driven by a surge in haven demand. Iran’s explicit threat of military retaliation following Israel’s targeting of its Syrian embassy has escalated tensions, amplifying the spectre of a broader regional conflict with potentially unforeseeable repercussions. Concurrently, the ongoing conflict in Ukraine exacerbates investor anxieties.
‘Against this turbulent backdrop, the imminent release of US inflation data and the latest FOMC minutes on Wednesday loom large, poised to either fuel the gold frenzy or temper its ascent, depending on the clues they may leave regarding the Federal Reserve’s anticipated timing for its first rate cut.’
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